Abstract:

This study explores the intersection of religion and the economy by focusing on the case of socially responsible investing (SRI) mutual funds that are also religiously affiliated. Mutual fund managers and investors understandably want competitive return performance from their investments. Yet religious fund actors are also oriented toward avoiding ownership in “sin stocks” and/or trying to change the behavior of corporations that are held in investment portfolios. Meeting both monetary and moral objectives can be a challenge. In this study, I address two broad research questions. Firstly, how do social actors balance their moral commitments against their monetary interest? Through 29 semi-formal phone interviews with fund producers (or the employees) of Catholic, Muslim and Protestant religious mutual funds, I analyze their embedding and differentiating cultural work as they make sense of their involvement in the economic and religious spheres (Chapter 1). In a separate analysis, I conduct and analyze 41 phone interviews with investors of one religious fund family, Mennonite Mutual Aid (MMA) Praxis mutual funds. In particular, I compare the moral meaning respondents articulate for their charitable giving and their SR investing (Chapter 4). Secondly, I query whether the moral orientation of investors impacts their financial market behavior? Using data from the Center for Research in Security Prices (CRSP) from 1991 to 2007, I partition mutual funds into religious SRI, religious non-SRI and secular SRI and look for differences in levels of fund asset stability. This stability refers to fund flow volatility and the extent to which investors hold on to their fund shares with little regard to past return performance. Religious SRI assets are found to be the most stable fund category and I adjudicate whether the structural characteristics of religious groups or the moral orientation of religious investors best explains this empirical finding (Chapter 2). In a separate analysis, I analyze original phone survey data of MMA Praxis investors. This article’s theoretical orientation focuses on moral and monetary “interest,” defined as an individual level driving force. I find empirical evidence that moral interest induces fund commitment to SRI mutual funds, demonstrating that morality impacts behavior even in the financial market, a realm where monetary interest supposedly reigns. At the same time, I also find some evidence that monetary interest decreases fund commitment (Chapter 3).